The Foreign Corrupt Practices Act (FCPA) is a United States federal law which was enacted in 1977. The act consists of two main provisions, the first being against bribery of foreign officials and the second enforcing accounting transparency requirements. The provisions are controlled by the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) respectively. [1]
Coverage
The anti-bribery provisions cover three different kinds of corporate entities and individuals: (1) Issuers. Issuers are companies that collaborate with the SEC either by registering their stock with them or filing reports with them regularly. (2) Domestic Concerns. Any U.S. citizens, nationals, residents or businesses whose main place of business is in the United States is considered a domestic concern. (3) Foreign nationals or businesses that operate within the United States. [2]
Enforcement
The FCPA was enacted in 1977 but in the past few years, starting approximately 30 years after its enactment, the levels of enforcement have risen noticeably. The goals of the Obama administration are promoting transparency, democracy and sustainable development as well as good governance. FCPA enforcement has been made a top priority, which is in keeping with the goals. The focus will also be directed towards two new industries; the pharmaceutical and financial industries. [3]
Penalties
Violation of the FCPA distinguishes between the civil and criminal side and can lead to penalties and imprisonment. On the civil side penalties cannot exceed 10,000 U.S. dollars, whereas imprisonment on the criminal side cannot exceed five years.
In recent years there have been a few cases that have led to fines on a large scale. These include the case against Siemens, AG and three subsidiaries in December 2008 and the case against Technip S.A. in June 2010. The cases resulted in 1.6 billion dollars in fines to U.S. and foreign and 240 million dollars in criminal penalty as well as 98 million dollars in disgorged profits respectively. [4] In 2012 there was a case within the pharmaceutical industry when Pfizer H.C.P. Corporation was charged with violations against the FCPA. Pfizer ended up agreeing to pay 15 million to resolve the investigation. [5]
Critique
The Foreign Corrupt Practices Act has been criticized for how broadly it can be applied by the United States Chamber of Commerce and individual companies. The Department of Justice released a resource guide in response to that critique. The guide explains their look on the coverage of the law. The Chamber of Commerce has also expressed complaints about the lack of definitions of certain concepts such as a "foreign official". Despite this critique other countries, such as Canada for example, are implementing or expanding their anti-bribery laws in keeping with the United States' FCPA. [6]
In keeping with the FCPA companies are held accountable for, not only bribes that are paid, but also ones that are merely offered. The law also entails bribes that are paid by a company's subsidiaries or business partners which poses a threat to multinational companies. This has been brought up as being a risk with the FCPA. [7]
Introduction to the Foreign Corrupt Practices Act
Table of Contents
Coverage
The anti-bribery provisions cover three different kinds of corporate entities and individuals: (1) Issuers. Issuers are companies that collaborate with the SEC either by registering their stock with them or filing reports with them regularly. (2) Domestic Concerns. Any U.S. citizens, nationals, residents or businesses whose main place of business is in the United States is considered a domestic concern. (3) Foreign nationals or businesses that operate within the United States. [2]
Enforcement
The FCPA was enacted in 1977 but in the past few years, starting approximately 30 years after its enactment, the levels of enforcement have risen noticeably. The goals of the Obama administration are promoting transparency, democracy and sustainable development as well as good governance. FCPA enforcement has been made a top priority, which is in keeping with the goals. The focus will also be directed towards two new industries; the pharmaceutical and financial industries. [3]
Penalties
Violation of the FCPA distinguishes between the civil and criminal side and can lead to penalties and imprisonment. On the civil side penalties cannot exceed 10,000 U.S. dollars, whereas imprisonment on the criminal side cannot exceed five years.In recent years there have been a few cases that have led to fines on a large scale. These include the case against Siemens, AG and three subsidiaries in December 2008 and the case against Technip S.A. in June 2010. The cases resulted in 1.6 billion dollars in fines to U.S. and foreign and 240 million dollars in criminal penalty as well as 98 million dollars in disgorged profits respectively. [4] In 2012 there was a case within the pharmaceutical industry when Pfizer H.C.P. Corporation was charged with violations against the FCPA. Pfizer ended up agreeing to pay 15 million to resolve the investigation. [5]
Critique
The Foreign Corrupt Practices Act has been criticized for how broadly it can be applied by the United States Chamber of Commerce and individual companies. The Department of Justice released a resource guide in response to that critique. The guide explains their look on the coverage of the law. The Chamber of Commerce has also expressed complaints about the lack of definitions of certain concepts such as a "foreign official". Despite this critique other countries, such as Canada for example, are implementing or expanding their anti-bribery laws in keeping with the United States' FCPA. [6]
In keeping with the FCPA companies are held accountable for, not only bribes that are paid, but also ones that are merely offered. The law also entails bribes that are paid by a company's subsidiaries or business partners which poses a threat to multinational companies. This has been brought up as being a risk with the FCPA. [7]
Spotlight on Foreign Corrupt Practices Act (2014)
Available at https://www.sec.gov/spotlight/fcpa.shtml
Navigating Through the FCPA Minefield, Debunking Myths and Addressing Red Flags (2013)
Available at http://www.worldcompliance.com/en/resources/white-papers/foreign-corruption-practices-act.aspx
Foreign Corrupt Practices Act, a compliance roadmap (2013)
Available at http://www.worldcompliance.com/en/resources/white-papers/foreign-corruption-practices-act.aspx
Foreign Corrupt Practices Act, a compliance roadmap (2013)
Available at http://www.worldcompliance.com/en/resources/white-papers/foreign-corruption-practices-act.aspx
Justice News (2012)
Available at http://www.justice.gov/opa/pr/pfizer-hcp-corp-agrees-pay-15-million-penalty-resolve-foreign-bribery-investigation
Available at http://dealbook.nytimes.com/2013/03/04/dealing-with-the-foreign-corrupt-practices-act/?_php=true&_type=blogs&_r=0
Available at http://search.proquest.com.proxy.shh.fi/docview/233186209?accountid=14198